Professional Documents
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George Eliades is a partner with Bain & Company based in San Francisco and
a leader in the rms Global Healthcare practice. Michael Retterath is a Bain
partner based in New York and a leader in the Global Healthcare practice.
Norbert Hueltenschmidt is a partner based in Zurich and the head of Bains
Global Healthcare practice. Karan Singh is a partner based in New Delhi and
head of Bains Asia-Pacic Healthcare practice.
Healthcare 2020
Healthcare 2020
Figure 1: By 2020, the global prot pool is expected to shift in several ways
Global healthcare profit pool (2010)
Total=$520B
EBIT margin
30%
23
16
20
18
16
15
14
12
11
10
4
1
0
Pharma
Rx
Revenue
(2010, $B): 495
Hospital
Retail pharmacy
Distribution
CXO
IVD
Medtech
Pharma OTC
Pharma Gx
230 100
260
44
62
850
Other providers
Care
PBM
Insurance US
Insurance nonUS
HC IT
Nutrition
501
266
450
260
55
64
Total=$740B
30%
20
19
16 16 16
13
14
12
10
3
Hospital
Other providers
3,714
2,826
5%
5%
1
0
Pharma
Rx
Distribution Retail
pharmacy
CXO
IVD
Medtech
Pharma OTC
Pharma Gx
Revenue
(2020, $B): 665 497 148 385 79 144 1,258 1,317
CAGR
(1020):
3%
7%
4%
4%
6%
9%
4%
4%
Care
PBM
Insurance US
Insurance nonUS
HC IT
Nutrition
Note: Insurance US reflects total health plan premiums; CXO represents contract research, manufacturing and sales organizations
Sources: IMS; Datamonitor; Business Insights; Freedonia; annual reports; analyst reports; CMS; OECD; Bain analysis
897 324
6%
5%
2%
5% 10% 6%
Healthcare 2020
Likewise, in India, the delivery of care and pharmaceutical sales will make up most of the fragmented
$65 billion market.11
Disruptive changes will alter the basis of competition, creating new opportunities to redene
business models and enter new markets
The sheer size of emerging markets makes them attractive offsets to more stagnant growth in other regions of
the world. But to be successful, companies will need new
business models to take advantage of the opportunities
there (see Figure 3). Profit pool shifts and the lack of
access to healthcare in many countries, for example,
may spur some pharmaceutical and medical technology
companies to meet the challenge by opening clinics
in the developing world, or even entering the private
insurance market.
Healthcare 2020
Figure 2: Hospitals and other providers account for about 40% of Chinas prot pool growth
China healthcare profit pool growth 20102020 (USD)
$125B
1
113
CAGR
(1020)
13
100
40% of profit
pool growth
6
6
17
75
9
50
25
17.6%
28
22
0
2010
Hospital
Other
providers
Pharma
Gx
Pharma
OTC
Medtech Distribution
Pharma
Rx
Retail
pharmacy
CXO
Insurance
2020
Note: OTC includes ~60% health nutrition; other providers include outpatient services, clinics and specialist services such as obstetrics and pediatrics
Sources: IMS; BMI; Espicom; annual reports; analyst reports; China Health Yearbook; National Bureau of Statistics of China; Bain analysis
Figure 3: Industry changes will create opportunities to redene business models and enter new markets
Global markets
Profit pool
driver
Implications
and
opportunities
Consumerdriven demand
Individual engagement
and experience
Professionalization of care
Healthcare 2020
Healthcare 2020
Figure 4: Trends affect disease states and procedures differently, creating distinct market dynamics
Consumer driven
Infertility
Breast implants
(aesthetics)
Erectile
dysfunction
Contraception
MS
Gastric band
Depression
Patient
engagement
T2 Diabetes
HIV
RA
Asthma
Migraine
T1 Diabetes
Asthma
Osteoporosis
Lupus
ADHD
ICD/Pacemaker
Schizophrenia
Knee/Hip
replacement
Hernia
Alzheimers
Hypertension Dialysis
Physician driven
Liver Stents
cancer
Pharma
Protocol driven
Medtech
Protocolization
Note: We determined the placement of diseases or conditions in this figure by assessing the number of protocols available, adjusted for prevalence and total spending on that condition.
For consumerization, we measured online presence and also adjusted for prevalence
Sources: International Guideline Library; National Guideline Clearinghouse data; National Health Service (UK); Medtech Insight; Bain analysis
Over time, more diseases will move up and to the righthand side of Figure 4. Protocolization and consumerism
will increase, and payers will demand and use better
data about outcomes. Although these changes will not
guarantee increased revenue, good outcomes should
result in a better share of the profit pool for players that
can shape the protocol development by demonstrating
how their products create value.
Healthcare 2020
For businesses in the more traditional, physiciandominated quadrants of Figure 4, winners will
build the capabilities to deliver risk-sharing models,
potentially partnering with payers and providers
or even directly becoming more involved in the
delivery of care.
Professional
ization of care
Consumer
marketing
powerhouse
Description
Model
Disease
population
manager
Integrated
care
company
Healthcare 2020
ways to reduce cost and demonstrate improved quality. For providers, it will be a choice of joining the
rush to become an integrated care company or trying
to find room to be a branded provider of choice.
For a select few, the old models could workbreakthrough innovation will still drive profitable growth,
but few, if any, have proven the ability to sustain this
over time. Cost pressures will force nearly every company
in the industry to rethink how and where it will grow
moving forward. Good strategic choices will still yield
growth. A profit pool that is growing at a breakneck
pace will no longer shelter poor choices. Executives
and investors can and must know where the profit
pools are shiftingand how they will change course
to successfully compete.
IMS Institute for Healthcare Informatics, The Global Use of Medicines: Outlook Through 2015, May 2011.
The methodology Bain used for developing this profit pool analysis is based on detailed health sector revenue and EBIT margin analysis for US and global sectors. The sector revenues
are based and triangulated on latest market reports; the sector margins are based on company annual reports; the 2010-2020 CAGRs are based on market reports, where available, and
Bain estimates; and the margin changes from 2010 to 2020 are based on proprietary Bain analysis.
The term protocolization refers to the application of proven standards of care and consistent protocols and guidelines to reduce variation in the delivery of healthcare.
Sources: Bain analysis, IMS, Datamonitor, Business Insights, Freedonia, annual reports, analyst reports, Centers for Medicare and Medicaid Services (CMS), OECD
Sources: IMS, Datamonitor, Business Insights, Freedonia, annual reports, analyst reports, CMS, OECD, Bain analysis
Sources: IMS, BMI, Espicom, annual reports, analyst reports, China Health Yearbook, National Bureau of Statistics of China, Bain analysis
10
Sources: IMS, BMI, Espicom, annual reports, analyst reports, China Health Yearbook, National Bureau of Statistics of China, Bain analysis
11
12
13
Susannah Fox, Pew Research Centers Internet & American Life Project Health Topics, February 1, 2011, http://pewinternet.org/Reports/2011/HealthTopics.aspx.
14
Indians Increasingly Use Internet for Their Healthcare Needs, Express Healthcare, http://www.expresshealthcare.in/201201/theyearthatwas201152.shtml.
15
Sources: International Guideline Library, National Guideline Clearinghouse data, National Health Service in UK, Medtech Insight and proprietary Bain analysis
The methodology for determining the degree of consumer engagement and protocolization in Figure 4 was developed by collecting all the protocols on each disease from a variety
of sources, scoring the current level of protocolization on a scale of one to 10 and then adjusting for prevalence and total spending on the disease. For consumerism, we monitored
the presence of topics for each disease on a variety of patient websites and corrected for prevalence.